Co‐integration Rank Determination in Partial Systems Using Information Criteria

We investigate the asymptotic and finite sample properties of the most widely used information criteria for co‐integration rank determination in ‘partial’ systems, i.e. in co‐integrated vector autoregressive (VAR) models where a sub‐set of variables of interest is modelled conditional on another sub‐set of variables. The asymptotic properties of the Akaike information criterion (AIC), the Bayesian information criterion (BIC) and the Hannan–Quinn information criterion (HQC) are established, and consistency of BIC and HQC is proved. Notably, the consistency of BIC and HQC is robust to violations of weak exogeneity of the conditioning variables with respect to the co‐integration parameters. More precisely, BIC and HQC recover the true co‐integration rank from the partial system analysis also when the conditional model does not convey all information about the co‐integration parameters. This result opens up interesting possibilities for practitioners who can now determine the co‐integration rank in partial systems without being concerned about the weak exogeneity of the conditioning variables. A Monte Carlo experiment based on a large dimensional data generating process shows that BIC and HQC applied in partial systems perform reasonably well in small samples and comparatively better than ‘traditional’ methods for co‐integration rank determination. We further show the usefulness of our approach and the benefits of the conditional system analysis in two empirical illustrations, both based on the estimation of VAR systems on US quarterly data. Overall, our analysis shows the gains of combining information criteria with partial system analysis.     

Bootstrap Co‐integration Rank Testing: The Effect of Bias‐Correcting Parameter Estimates

Bootstrap‐based methods for bias‐correcting the first‐stage parameter estimates used in some recently developed bootstrap implementations of co‐integration rank tests are investigated. The procedure constructs estimates of the bias in the original parameter estimates by using the average bias in the corresponding parameter estimates taken across a large number of auxiliary bootstrap replications. A number of possible implementations of this procedure are discussed and concrete recommendations made on the basis of finite sample performance evaluated by Monte Carlo simulation methods. The results show that bootstrap‐based bias‐correction methods can significantly improve the small sample performance of the bootstrap co‐integration rank tests.     

A Comparison of Sequential and Information‐based Methods for Determining the Co‐integration Rank in Heteroskedastic VAR Models

In this article, we investigate the behaviour of a number of methods for estimating the co‐integration rank in VAR systems characterized by heteroskedastic innovation processes. In particular, we compare the efficacy of the most widely used information criteria, such as Akaike Information Criterion (AIC) and Bayesian Information Criterion (BIC) , with the commonly used sequential approach of Johansen [Likelihood‐based Inference in Cointegrated Vector Autoregressive Models (1996)] based around the use of either asymptotic or wild bootstrap‐based likelihood ratio type tests. Complementing recent work done for the latter in Cavaliere, Rahbek and Taylor [Econometric Reviews (2014) forthcoming], we establish the asymptotic properties of the procedures based on information criteria in the presence of heteroskedasticity (conditional or unconditional) of a quite general and unknown form. The relative finite‐sample properties of the different methods are investigated by means of a Monte Carlo simulation study. For the simulation DGPs considered in the analysis, we find that the BIC‐based procedure and the bootstrap sequential test procedure deliver the best overall performance in terms of their frequency of selecting the correct co‐integration rank across different values of the co‐integration rank, sample size, stationary dynamics and models of heteroskedasticity. Of these, the wild bootstrap procedure is perhaps the more reliable overall as it avoids a significant tendency seen in the BIC‐based method to over‐estimate the co‐integration rank in relatively small sample sizes.     

Innovation and competitive advantages from the integration of strategic aspects with social and environmental management in European firms

This paper analyses the nature and details of the association that the integration of social and environmental considerations with corporate strategy has for different competitive advantages and innovation activities at the firm level. Its objective is to answer the question as to whether a positive link exists between integration and the effects of environmental and social performance on these different dimensions of economic performance. The question of the specific form of this relationship is also raised. These questions are analysed using cluster analysis and regression models. Results are presented for four different dimensions of competitive advantage, and for two types of innovation activity. These raise the possibility that the process of integration is more important for bringing about a positive link than a resulting integration type. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.     

‘Derivative’ firms,agency and economic integration

This paper proposes a ‘derivative’ firm model that emphasizes the decisions to invest in productive assets and to contract with firm managers. Contemporary examples of derivative firms include joint ventures and LBOs. The traditional joint venture is recast as a derivative firm with the model pointing out why managerial contracts and asset investment decisions should be made simultaneously for optimal shareholder wealth.     

Detecting Co‐Movements in Non‐Causal Time Series

This paper introduces the notion of common non‐causal features and proposes tools to detect them in multivariate time series models. We argue that the existence of co‐movements might not be detected using the conventional stationary vector autoregressive (VAR) model as the common dynamics are present in the non‐causal (i.e. forward‐looking) component of the series. We show that the presence of a reduced rank structure allows to identify purely causal and non‐causal VAR processes of order P>1 even in the Gaussian likelihood framework. Hence, usual test statistics and canonical correlation analysis can be applied, where either lags or leads are used as instruments to determine whether the common features are present in either the backward‐ or forward‐looking dynamics of the series. The proposed definitions of co‐movements are also valid for the mixed causal—non‐causal VAR, with the exception that a non‐Gaussian maximum likelihood estimator is necessary. This means however that one loses the benefits of the simple tools proposed. An empirical analysis on Brent and West Texas Intermediate oil prices illustrates the findings. No short run co‐movements are found in a conventional causal VAR, but they are detected when considering a purely non‐causal VAR.     

Co‐creating nonprofit brand equity

• The concept of brand equity (BE) has been the subject of much recent discussion in the field of nonprofit branding and also has been the concept of brand co‐creation in the field of branding. This study combines these aspects and examines the BE co‐creation of a nonprofit entity, the Finnish Defence Forces military driving school. Empirical data were collected from industrial logistics service providers and military recruits. A theoretical BE model was further developed using structural equation modeling in an exploratory manner to reveal whether the BE model of the military driving school is similar from both viewpoints. Similar workable models were found, indicating strong BE co‐creation and thereby contributing to the field. To support the future co‐creation of BE of the military driving school, it is important to ensure that the recruits take positive experiences from the school and industrial logistics service providers carefully consider how they relay their experiences about the school to other truck drivers. The attitudes of recruits towards the military driving school are likely eventually to conform to those of civilian truck drivers. Finding workable models required omitting some BE dimensions and measures of earlier models. Moreover, using data from one country alone may be a limitation of the study. Therefore, nonprofit BE measures should be further developed and tested with data from further afield.

Copyright © 2012 John Wiley & Sons, Ltd.     

Co‐evolution in an Institutionalized Environment*

abstract This paper examines the extent to which co‐evolution can take place within a heavily constrained environment and how changes in the degree of institutionalization are relevant to opportunities for exercising strategic choice at the level of the firm. It addresses these questions through a detailed case study of a major Brazilian telecommunications company, Telemig, covering its life span of 27 years from 1973 to 2000. The insights obtained advance the theory of co‐evolution by incorporating a political dimension of how organizations are transformed into new forms. In the case studied, new forms arose with radical changes in the rules affecting competition and with de‐institutionalization of the economic regime by coalitions of actors who were strategically located in networks that crossed system levels. Although the Telemig case presents circumstances different to those usually addressed by studies of co‐evolution, it nevertheless points to the virtues of combining a strategic choice approach with one that focuses on the isomorphic effects of institutional constraints.     

Sharing knowledge in knowledge‐intensive firms

Knowledge‐intensive firms need to share knowledge held by employees if they are to gain the most from their intellectual capital and compete effectively in the marketplace. Sharing and integrating knowledge within the organisation depends partly on building social capital. However, there are obstacles to this integration because knowledge is often distributed throughout the organisation. This article draws on a detailed study of a single case to examine the ways in which HR policies and processes contribute to overcoming these barriers to sharing knowledge. We highlight the role of HR policies and processes as facilitators of the social capital that interconnects knowledge by focusing on the needs of knowledge workers.     

Learning in owner-managed small firms: Mediating artefacts and strategic space

The authors focus on the way in which owner-managers in smaller firms improve their businesses through the creation of ‘strategic space’. The term ‘strategic space’ refers to the process by which owner-managers are able to access resources, motivation and capability to review existing practices. The starting point is the owner-manager's human capital and their capacity to engage in critical reflection about their business. We highlight three concepts central to the creation of strategic space, first, social capital, which refers to the network relationships that provide access to a wide range of resources and information. Second, absorptive capacity, which describes the way in which organizational members identify, acquire and utilize knowledge from external sources. Third, mediating artefacts, which represent existing knowledge but also facilitate the translation and transformation of understanding within and between communities of practice. This process is essential to the renewal of knowledge and knowing within firms. The contribution this paper makes is to bring together these elements – human and social capital, absorptive capacity and mediating artefacts – to offer a conceptual model that illustrates the mechanism by which owner-managers create strategic space. This model provides a deeper understanding of the evolution of knowledge in smaller organizations.     

The integration of forecasting and strategic planning

The paper analyzes the use of information in companies planning strategically versus those which are not. This contrast is used to build the case for developing strategic forecasting capability which focuses on a variety of environments, is proactive and interactive, and creates a need for different kinds of data bases and forecasting techniques.     

The Dynamics of Influence in Corporate Co‐Evolution

This paper aims to offer new theoretical and empirical insights into co‐evolutionary development. Theoretically, it advances a political perspective which focuses on the role of power and how this can be translated into influence as an evolutionary driver through the relational framework between an organization and external parties. Empirically, the paper elaborates this perspective by reference to how China's largest container terminal evolved within a changing environment, and how its evolution in turn impacted on the evolution of its sector. In this case, the key relational framework was that between the organization and government institutions. Application of a political perspective to the case study suggests a theoretical model that can inform future research and practice.     

Equity‐Liabilities Distinction: The case for Co‐operatives*

Members' shares in co‐operative entities are financial instruments with particular characteristics. In this paper we analyse the relation between firm leverage and systematic risk to provide empirical evidence on the economic substance of the member shares of members of cooperatives. We have studied the characteristics of members' shares in six European countries: France, Germany, Italy, Portugal, Spain and United Kingdom. We have also conducted tests on co‐operatives of these countries over the period 1993–2005. The study reports that in global terms the economic substance of the redeemable part of equity in co‐operatives is not the same across countries. Therefore if accounting standards setters want to develop a global standard for co‐operatives, a recommendation derived from this study would be to follow a probabilistic model to classify the redeemable part of co‐operative financial instruments, where the entity does not have the unconditional right to refuse the redemption, or to report this part as an intermediate item with characteristics of debt and equity.     

Social and cultural capital in project marketing service firms: Danish architectural firms on the German market

This article analyses the marketing activities of three Danish architectural firms in Germany during the 1990s from a perspective that is new to project marketing, in that the Bourdivan concepts of social and cultural capital are applied to the offerings and activities of firms. In architecture, cultural capital accumulation entails such things as building visible buildings, winning design competitions, or obtaining important tenders, whereas social capital is accumulated through the recognition by other construction industry actors that one is a member of their circles. The cases presented provide support for our claim that the accumulation of social and cultural capital is crucial to acquiring architectural projects, while also indicating that cultural and social capital are internationally transferable to a limited extent only. This in turn suggests that national construction industries are best viewed as distinct project marketing milieus.     

HRM in project‐intensive firms: Changes and challenges

One of the most profound organizational changes currently under way is the application of project‐based structures within and between firms. This change is happening in both growth and mature industries. Several management scholars have taken interest in the reasons why firms adopt proj‐ect‐based ways of working. However, the effect of project‐based organizing on the firm's HRM is a recurrent problem and a challenge to many companies. We develop a framework for the analysis of HRM in project‐intensive firms. Based on a study of four companies and the transformation of their organizational structures and processes, we identify four managerial issues and a number of questions that must be addressed to improve HRM in proj‐ect‐intensive firms. © 2006 Wiley Periodicals, Inc.     

Increased word‐of‐mouth via strategic cause‐related marketing

• This research examines word‐of‐mouth (WOM) promotions as an additional consequence of a successful cause‐related marketing (CRM) partnership. Firms properly aligned in CRM partnerships should increase positive feelings that can translate into positive WOM from the public. WOM efforts should be considered in marketing campaigns to develop successful long‐term CRM strategies. Additionally, carefully planned CRM campaigns with positive WOM give firms a competitive advantage without the backlash of consumer skepticism often reported when firms attempt to manipulate WOM campaigns. This study is grounded in associative learning theory which provides support for the strengthened associative links between firm and charity when the relationship is properly aligned. This empirical study suggests that strategically aligned CRM relationships can improve positive WOM recommendations. Results of ANOVA and factor analysis indicate that consumers are more receptive to CRM partnerships that consist of compatibility between firm and charity that persist over time. Results suggest that consumers are more likely to recommend the more properly aligned partnerships to others.

Copyright © 2010 John Wiley & Sons, Ltd.     

The importance of firms in wage determination

Firms are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility – job-to-job vs. job-unemployment-job – affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the importance of firm wage policies in explaining wage differences by as much as 50%.     

Alignment of strategic priorities and performance: an integration of operations and strategic management perspectives

In theory, strategic priorities at the functional level align with and support business level strategies. Alignment of priorities is presumed to contribute to enhanced organizational performance, just as misalignment is expected to undermine performance. This study further develops and tests these theoretical conventions by examining the perceptions of general managers and manufacturing managers regarding manufacturing priorities of their business units. Based on a sample of matched pairs of manufacturing managers and general managers from 98 manufacturing plants, the hypotheses regarding the alignment–performance relationship are tested. Specifically, we tested whether the performance of the manufacturing unit is enhanced when general managers and manufacturing managers agree on strategic priorities. Furthermore, the influence of organizational factors on the relationship between alignment and performance of the manufacturing unit is studied. Results support our hypotheses that certain organizational variables moderate the relationship between alignment of priorities and manufacturing performance.